Request By:
Mr. Edsel T. Jones
Attorney at Law
68 South Main Street
Winchester, Kentucky 42391
Opinion
Opinion By: Robert F. Stephens, Attorney General; By William S. Riley, Assistant Attorney General
In your recent letter four questions have been submitted on behalf of the City of Winchester, a third class city operating under the city manager form of government.
(1) If the city imposes a payroll tax on persons employed within the city, is there any requirement that the city must also impose a net profits tax on self-employed persons, businesses and corporations?
Answer: We are enclosing a copy of OAG 76-101 which points out that a city can levy a payroll tax without levying a gross receipts tax or net profits tax.
(2) If the city imposes a payroll tax at a fixed percentage of income, may it impose an occupational license tax at a fixed fee for self-employed persons, businesses and corporations?
Answer: So long as there is a reasonable justification for the classification used the answer is, yes. See OAG 76-101.
(3) If the city imposes a payroll tax a net profits tax at a percentage of income, in both cases may it also impose a minimum fee schedule applicable to those subject to the net profits tax?
Answer: No. This would probably be considered as double taxation.
(4) May the city impose a payroll tax upon persons employed outside the city limits, but upon property to which the city has legal title, subject to a lease, pursuant to an industrial revenue bond issue?
Answer: No. The payroll tax must be imposed upon compensation earned within the corporate limits of the city.